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Socially responsible investing: performance evaluation of BRICS nations

Author

Listed:
  • Vanita Tripathi
  • Amanpreet Kaur
Abstract
Purpose - The study aims to contribute towards the sustainable development of financial systems, by testing the performance of socially responsible investing alternatives in emerging BRICS countries. The study outcomes give us an insight into viability of responsible financial decisions in contrast with the conventional style of investing. Design/methodology/approach - The authors examine the performance of socially responsible indices of BRICS nations vis-à-vis respective conventional market indices using various risk-adjusted measures and conditional volatility measures. We further segregate the 12-year study period to crisis and non-crisis period particular to the respective country, as well as a common global financial crisis period to analyze the impact of market conditions in BRICS nations and observe the performance using dummy regression analysis. Conditional volatility of the stochastic index series is measured using ARCH-GARCH analysis. Fama Decomposition Model helps rank the index performance through the sub-periods. Findings - Fama Decomposition Model helps us observe that while Brazil secures a position in top rankers consistently, it is India that ranks top during crisis period. With evidence of outperformance in terms of risk-return by SRI indices of BRICS countries through the overall period as well as through different market conditions, our study contributes to the positive literature on socially responsible investing. Research limitations/implications - The study explores performance of SRI in BRICS and finds evidence of the sustainable investment to be non-penalizing to the investor, even as the performance trend remain distinct in the countries with same level of development. It has implications for the investors and asset managers to include responsible stocks, while for the companies and regulatory bodies to unite for better reporting and disclosures. Given the broad implications, future research is required to link the impact of various cultural, legislative and demographic factors on the level and performance of the socially responsible investment in BRICS nations. Practical implications - The current study evaluating and comparing performances of the socially responsible investments in BRICS nations puts forth following implications for the different sectors of the society, especially in emerging countries: (1) BRICS organization – The association of five economic giants, having significant influence over global as well as regional affairs, can aim to orient the countries' efforts towards collective sustainable development by designing uniform SRI framework. (2) Investors – In the globalization era, the investor can gain from ethical cross border investments to diversification and country benefits. (3) Companies and regulatory bodies – Only voluntary or mandatory unified efforts, to provide accurate and consistent disclosures, can upscale the mediocre growth trends of sustainable investing in emerging economies. (4) Asset Managers – Call of greater role in educating, warding off inhibitions related to RI. Originality/value - This is to certify that the research paper submitted by us is an outcome of our independent and original work. We have duly acknowledged all the sources from which the ideas and extracts have been taken. The project is free from any plagiarism and has not been submitted elsewhere for publication.

Suggested Citation

  • Vanita Tripathi & Amanpreet Kaur, 2020. "Socially responsible investing: performance evaluation of BRICS nations," Journal of Advances in Management Research, Emerald Group Publishing Limited, vol. 17(4), pages 525-547, June.
    • Handle: RePEc:eme:jamrpp:jamr-02-2020-0020
    DOI: 10.1108/JAMR-02-2020-0020
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    Citations

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    Cited by:

    1. Mikhail Zharikov, 2021. "A Debt Market Model for the BRICS," Economies, MDPI, vol. 9(1), pages 1-12, January.
    2. Mikhail V. Zharikov, 2022. "The Model of a Shared Interest Rate for a Group of Countries to Circulate a Digital Currency: Featuring the BRICS," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 11(2), pages 187-208.
    3. Ferrat, Yann & Daty, Frédéric & Burlacu, Radu, 2022. "Does a sustainability risk premium exist where it matters the most?," Emerging Markets Review, Elsevier, vol. 53(C).
    4. Ana Ivanisevic Hernaus & Davor Zoricic & Denis Dolinar, 2023. "How competitive is SRI in developing financial markets: The case of Central and Eastern Europe," E&M Economics and Management, Technical University of Liberec, Faculty of Economics, vol. 26(2), pages 172-188, June.
    5. Julia V. Ragulina & Vladimir F. Ukolov & Oleg V. Shabunevich, 2021. "Adaptation to the Risks of Digitalization: New Survival Trends for States in a Multipolar World," Risks, MDPI, vol. 9(12), pages 1-21, December.
    6. Ved Dilip Beloskar & Arunima Haldar & S. V. D. Nageswara Rao, 2023. "Socially responsible investments: A retrospective review and future research agenda," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 4841-4860, November.
    7. Rabi Narayan Kar & Amanpreet Kaur, 2023. "Do Disclosures Drive Socially Responsible Investing?," Paradigm, , vol. 27(1), pages 7-26, June.
    8. Vanita Tripathi & Amanpreet Kaur, 2022. "Does Socially Responsible Investing Pay in Developing Countries? A Comparative Study Across Select Developed and Developing Markets," FIIB Business Review, , vol. 11(2), pages 189-205, June.

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